Siemens 2008 Annual Report Download - page 274

178 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise stated and per share amounts)
The Federal Republic of Germany has commissioned a consortium consisting of Siemens IT Solutions and
Services and IBM Deutschland GmbH (IBM) to modernize and operate the non-military information and com-
munications technology of the German Federal Armed Forces (Bundeswehr). This project is called HERKULES.
A project company, BWI Informationstechnik GmbH (BWI) will provide the services required by the terms of the
contract. Siemens IT Solution and Services is a shareholder in the project company. The total contract value
amounts to a maximum of approximately €6 billion. In connection with the consortium and execution of the
contract between BWI and the Federal Republic of Germany in December 2006, Siemens issued several guaran-
tees connected to each other legally and economically in favor of the Federal Republic of Germany and of the
consortium member IBM. The guarantees ensure that BWI has sufcient resources to provide the required
services and to fulll its contractual obligations. These guarantees are listed as a separate item “HERKULES
obligations” in the table above due to their compound and multilayer nature. Total future payments potentially
required by Siemens amount to €3.89 billion as of September 30, 2008 and will be reduced by approximately
€400 per year over the remaining 9-year contract period. Yearly payments under these guarantees are limited
to €400 plus, if applicable, a maximum of €90 in unused guarantees carried forward from the prior year.
Other include indemnications issued in connection with dispositions of business entities. Such indemnica-
tions protect the buyer from tax, legal and other risks in conjunction with the purchased business entity. Indem-
nications primarily relate to NSN, disposed of in scal 2007, as well as to SV and EN, disposed of in scal 2008
(see Note 4). As of September 30, 2008 and 2007, the total amount accrued for guarantees in Other is €397 and
€102, respectively.
As of September 30, 2008, future payment obligations under non-cancellable operating leases are as follows:
Total operating rental expense for the years ended September 30, 2008 and 2007 was €954 and €875, respec-
tively.
As of September 30, 2008 and 2007, the Company has commitments to make capital contributions of €56 and
€103, respectively, to other non-consolidated companies.
The Company is jointly and severally liable and has capital contribution obligations as a partner in commercial
partnerships and as a participant in various consortiums.
2009 631
2010 484
2011 361
2012 286
2013 262
Thereafter 691